US is now halfway to a lost economic decade. In the past five years, our economy’s growth rate averaged less than one per cent a year, similar to Japan when its bubble burst. At the same time, the fraction of the population working has fallen from 63.1 per cent to 58.4 per cent, reducing the number of those in jobs by more than 10m.

Summers is right, if one takes the average GDP growth from 2006 to 2010, we have a whopping 0.96% GDP growth. We've also shown, in the unemployment report the employment participation rate is down the 1980's levels. Below are the number of payroll jobs since January 2001. That's over 11 years and we are down -1426 jobs.

A sick economy constrained by demand works very differently from a normal one. Measures that usually promote growth and job creation can have little effect, or backfire. When demand is constraining an economy, there is little to be gained from increasing potential supply. In a recession, if more people seek to borrow less or save more there is reduced demand, hence fewer jobs. Training programmes or measures to increase work incentives for those with high and low incomes may affect who gets the jobs, but in a demand-constrained economy will not affect the total number of jobs. Measures that increase productivity and efficiency, if they do not also translate into increased demand, may actually reduce the number of people working as the level of total output remains demand-constrained.

Summers is referring to Japan, who had their own real estate speculative bubble and unfortunately responded similarly to how the U.S. did. Therefore it's no surprise our economy is suffering, like Japan's has. Yet, we've already suffered before this. The last 11 years have been the lost decade for jobs.

At last, Summers is right on calling the economy the lost decade and is calling for infrastructure projects, which is investment spending as well as a jobs program. Summers is also calling for a payroll tax and to stop this never ending nonsense on debt, deficits and inflation in order to focus on growing the economy.

That said, the obvious, bad trade deals, offshore outsourcing and a group of multinationals who literally are writing jobs policy is no way to recover the economy. Either is resurrecting a dead Hoover, demanding balancing the budget somehow will solve our problems. It will not, not with this weak of an economy and a job crisis.

Summers seems to almost be warning the White House, never mind Republicans, that tackling the deficit is the wrong policy at the wrong time. So is Ben Bernanke.

These absurd debt ceiling and deficit reduction games of chicken must be getting serious. The CBO also came out gunning about the threats to not raise the debt ceiling, calling it a dangerous gamble that will add to the deficit. The CBO is also warning America is in for a world of hurt, a warning on their revised economic growth projections.

Of course tax increases never come up in these never ending cut spending arguments, while people are screaming from the rooftops, now even Larry Summers, the real crisis is a jobs one. All roads lead to jobs and without them, nothing else will happen. Take heart all HR layoff slashers and COO bean counters, jobs matter and literally can pull down a national economy.

So, is anyone out there willing to step up to the plate and pass policy that will actually help?

The Nation did some digging and routing and found 5 smart bills in Congress, that you've never heard of. These pieces of legislation will no doubt will never see the light of day because they make sense and would greatly help the economy and the middle class:

We can add to the Nation's list, a transaction tax on stock market trades, focusing on flash trading and derivatives, ban all Federal and State jobs offshore outsourced, bring them back and immediate across the board tariffs against China imports in response to their currency manipulation.

There are a lot of great ideas, polices that really could turn the U.S. economy around. The problem is they are drown out, lost in nonsense noise by people who have an agenda, but economically, don't know what they are talking about.

When even Larry Summers is writing op-eds, calling for action, perhaps it's time to raise your own voice and deficit reduction ain't it.

Comments

It seems Romer, Summers, Jared Bernstein formerly in Biden's office -- since leaving their old jobs at the White House, the high level people in charge of economic policy are saying JOBS-JOBS-JOBS.

Were they saying that at the White House?

I am interested to see what Austan Goolsbee will say about "the vexing problem" of the 99ers [the still unemployed folks who've run out of unemployment], once he's no long being paid to try to solve it.

Can it be that the last one standing -- Geithner -- has been putting the deficit before employment?

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But I find it interesting that they are all leaving and it's getting even worse. Larry Summers was a chief architect of the seeds which wrought our disaster and I'm thinking NAFTA, more importantly China trade agreement, along with the repeal of Glass-Steagall.

So, for him to write this op-ed, I will assume that even he is disgusted with what's going on in the White House and since he was chief economic adviser that tells me at least this must be coming from Obama and the political branch.

Either team Obama are afraid of their own shadow at that absurd GOP rhetoric or some corporate lobbyists are demanding they tackle the deficit. Sure, cut the waste but then the Stimulus had loads of waste and we railed on it at the time. But we wailed over TARP and wanted them to follow the plan Sweden did when they had their bubble/banks run amok.

In Congress, it's astounding the co-sponsors of bills imposing tariffs on China for currency manipulation, both parties, yet magically those are never called up for a vote on the floor. How can one have almost every member of Congress be a bill co-sponsor yet it never comes up for a vote?

Geithner, White House, refusal to do anything or are the bills stuck buried just for show?

But even in the GOP debate, shock of all shocks, I heard some plans to give a 100% tax holiday for anyone who manufactures in the United States for a period and government investment in manufacturing as well.

That was pretty Keynesian.

Don't forget to rate up posts to the front page folks.

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Drown out is an established idiom. I don't understand why people focus on spelling or grammar mistakes instead of commenting on the intent and content of the materials. I've seen this before, not only online, but in professional situations and it's like some sort of brain freeze. I get it when there are massive spelling and grammar mistakes and some of the comments blow any sort of credibility for that person cannot write a sentence.

That said, why focus in on some trivial error that in this case is not one? Why not focus in on what the post is bringing to your attention?

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"Either team Obama are afraid of their own shadow at that absurd GOP rhetoric or some corporate lobbyists are demanding they tackle the deficit."

It's pretty clear, IMO, what's happened with "Team Obama." They simply never imagined that partisan rhetoric -- elevated to the status of absolutely uncompromisable ideological 'principle' -- could become an overriding force in Congress. Nothing like that ever happened in Chicago!

Now convinced that Washington politics are more whacko than anything he could ever imagine, he is declining all but pro-forma participation in the legislative proceedings of Congress. (That approach is, after all, not incompatible with the separation-of-powers doctrine!)

"Okay," the President has concluded, "if Obama (the individual) is the issue, and that cannot be compromised, let's go!" For all intents and purposes, Team Obama proclaimed the beginning of 2012 almost a full year before the next New Year. Amazingly this proclamation has actually worked to some extent. Republicans too believe that we are already in 2012 -- and they even believe that they can afford to bicker amongst themselves, because they think that victory is theirs in 2012. Maybe Republicans should be thinking more like "2012 is ours to lose"!

Obama is playing it like this: "Okay, you raise with your refusal to increase the debt ceiling, I stand pat, it's up to you ... " Then he steps out of the room and goes off to campaign. "Let me know what you decide."

Barack Obama as a politician should never be underestimated. He has made mistakes and risks losing his base, but that doesn't necessarily mean that he is done.

What does this mean for economic policy? It means that we can forget about reality, forget what we know, forget about sane solutions. Until after November, 2012, it's all going to be the smoke and mirrors of partisan politics. Of course, there will be casualties in the darkness at noon. Maybe blood will flow on the streets.

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